Currently, nearly 39 million people live in apartments, and the apartment industry is quickly exceeding capacity;

In the past five years, an average of one million new renter households were formed every year, which is a record amount; and

It will take building an average of at least 325,000 new apartment homes every year to meet demand; yet, on average, just 244,000 apartments were delivered from 2012 through 2016.

The study, prepared by Hoyt Advisory Services, Dinn Focused Marketing and Whitegate Real Estate Advisors, was authored by Norm Miller, Hahn Chair of Real Estate Finance at the University of San Diego School of Business and the Burnham-Moores Center for Real Estate; Jeffrey D. Fisher, professor emeritus at Indiana University and visiting professor at Johns Hopkins University; Michael Dinn, leader of Dinn Focused Marketing; and Paige Muller, CEO of Whitegate Real Estate Advisors. Data from the research conducted on the future demand for apartments can be viewed at www.WeAreApartments.org.

Increased demand of apartments within the cities studied are in large part due to:

A delay in housing purchases: Life events such as marriage and children are the biggest drivers of home ownership. In 1960, 44 percent of all households in the U.S. were married couples with children. Today, it’s less than one in five (19 percent), and this trend is expected to continue.

An aging population: People ages 65-plus will account for a large part of population growth going forward across all states. The research shows older renters are helping to drive future apartment demand, particularly in the northeast, where renters ages 55-plus will account for more than 30 percent of rental households.

Immigration: International immigration is forecast to account for approximately half (51 percent) of all new population growth in the U.S., with higher growth expected in the nation’s border states. This population increase will contribute significantly to the rising demand for apartments, even though the immigration rate may be lower for the next four years due to a less welcoming national policy. Research has shown that immigrants have a higher propensity to rent and typically rent for longer periods of time.

“We’re experiencing fundamental shifts in our housing dynamics, as more people are moving away from buying houses and choosing apartments instead,” says Miller. “More than 75 million people between the ages of 18 and 34 are entering the housing market, primarily as renters, but renting is not just for the younger generations anymore. Increasingly, Baby Boomers and other empty nesters are trading single-family houses for the convenience of rental apartments. In fact, more than half of the net increase in renter households over the past decade came from the 45-plus demographic.”

The study concludes that a growing need for renovations and improvements on existing apartment buildings is required to maintain the existing stock. Hoyt’s research found that 51 percent of the apartment stock was built before 1980, which translates into 11.7 million units that could need upgrading by 2030. The older stock is highly concentrated in the northeast.

Other highlights from the report include:

Demand is expected to be especially significant in Seattle, Washington. Raleigh, North Carolina, Orlando, Florida, and Austin, Texas. Also notable, the demand in the New York City metro area will call for an additional 278,634 apartment units, Dallas-Ft. Worth, Texas (266,296 new units), and Houston, Texas (214,176 new units).

Propensity to rent is higher in high-growth and high-cost states, primarily because of the lack of housing affordability.

Hundreds of thousands of new rental units will be needed by 2030 in states such as California, Georgia, Arizona, Florida, North Carolina, Nevada, New York, Texas, Virginia and Washington.

In conjunction with the study’s release, the website www.WeAreApartments.org breaks down the data by each state and 50 key metro areas. The Apartment Community Estimator (ACE) tool can also be used to see the trends in a given state or metro area to determine the potential economic impact locally.

This research was covered by more than 50 media outlets nationally. For links to those stories, contact Kimberly Malasky, director of communications and marketing for the Burnham-Moores Center for Real Estate.